Did the $660 Billion Paycheck Protection Program and $220 Billion Economic Injury Disaster Loan Program Get Disbursed to Minority Communities in the Early Stages of Covid-19?

25 Pages Posted: 12 Jan 2021 Last revised: 18 Nov 2024

See all articles by Robert W. Fairlie

Robert W. Fairlie

University of California, Los Angeles (UCLA); National Bureau of Economic Research

Frank M. Fossen

University of Nevada, Reno; IZA Institute of Labor Economics

Date Written: January 2021

Abstract

Social distancing restrictions and health- and economic-driven demand shifts from COVID-19 shut down many small businesses with especially negative impacts on minority owners. Is there evidence that the unprecedented federal government response to help small businesses – the $659 billion Paycheck Protection Program (PPP) and the related $220 billion COVID-19 Economic Injury Disaster Loans (EIDL) – which had a stated goal of helping disadvantaged groups, was disbursed evenly to minority communities? In this descriptive research note, we provide the first detailed analysis of how the PPP and EIDL funds were disbursed across minority communities in the country. From our analysis of data on the universe of loans from these programs and administrative data on employer firms, we generally find a slightly positive relationship between PPP loan receipt per business and the minority share of the population or businesses, although funds flowed to minority communities later than to communities with lower minority shares. PPP loan amounts, however, are negatively related to the minority share of the population. The EIDL program, in contrast, both in numbers and amounts, was distributed positively to minority communities.

Suggested Citation

Fairlie, Robert W. and Fossen, Frank M., Did the $660 Billion Paycheck Protection Program and $220 Billion Economic Injury Disaster Loan Program Get Disbursed to Minority Communities in the Early Stages of Covid-19? (January 2021). NBER Working Paper No. w28321, Available at SSRN: https://ssrn.com/abstract=3763849

Robert W. Fairlie (Contact Author)

University of California, Los Angeles (UCLA) ( email )

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HOME PAGE: http://https://rfairlie.sites.luskin.ucla.edu/

National Bureau of Economic Research ( email )

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HOME PAGE: http://www.nber.org/people/robert_fairlie?page=1&perPage=50

Frank M. Fossen

University of Nevada, Reno ( email )

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Reno, NV 89557-0030
United States

HOME PAGE: http://business.unr.edu/faculty/ffossen/

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=2906

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